Professional Documents
Culture Documents
2d 728
53 USLW 2607, 15 Envtl. L. Rep. 20,545,
12 O.S.H. Cas.(BNA) 1337,
1984-1985 O.S.H.D. ( 27,293
Richard E. Schwartz, Collier, Shannon, Rill & Scott, Washington, D.C., for the
American Iron and Steel Institute as amicus curiae.
Neil F. Hartigan, Atty. Gen., State of Ill., Lee Hettinger, Chief, Stephen
Grossmark, Asst. Atty. Gen., Environmental Control Div., Chicago, Ill., for the
People of the State of Ill.
Francis X. Bellotti, Atty. Gen., Judith S. Yogman, Asst. Atty. Gen., Stephen S.
Ostrach (argued), Asst. Atty. Gen., Government Bureau, Boston, Mass., for
petitioner Com. of Mass.
Beverly Gross, Linda M. Nelson, New York City, for amicus curiae Municipal
Labor Committee.
10
Paul Bardacke, Atty. Gen., Douglas Meiklejohn, Asst. Atty. Gen., Christopher
D. Coppin, Asst. Atty. Gen., Santa Fe, N.M., for amicus curiae State of N.M.
and the New Mexico Health and Environment Dept.
11
12
Frederick J. Jacobs, New York City, for N.Y. Committee for Occupational
Safety and Health.
13
Bronson C. LaFollette, Atty. Gen., Nadim Sahar, Asst. Atty. Gen., Wis. Dept.
of Justice, Madison, Wis., for amicus curiae State of Wis.
14
Chauncey H. Browning, Atty. Gen., Leonard Knee, Deputy Atty. Gen., Edward
Z. Fox, Asst. Atty. Gen., Charleston, W.V., for amicus curiae for the State of
W.V.
15
Before GIBBONS, Circuit Judge, and FISHER, Chief Judge* and KELLY,
District Judge**
This case involves consolidated petitions for judicial review of the Hazard
Communications Standard promulgated by the Secretary of Labor on the
authority of the Occupational Safety and Health Act of 1970 (OSH Act) 1 ,
Pub.L. 91-596, 84 Stat. 1590, 29 U.S.C. Sec. 651 et seq. (1982) Certain
intervenors challenge our jurisdiction to consider the petitions pursuant to 29
U.S.C. Sec. 655(f) (1982), contending that the action under review is a
regulation rather than a standard. Petitioners and the Secretary urge that we
have jurisdiction. Petitioners and intervenors challenge the standard on several
substantive grounds, while the Secretary defends it. We conclude that the
petitions for review are properly here, and thus address the substantive
challenges.
I.
Evolution of the Standard
17
20
In 1974, the National Institute for Occupational Safety and Health (NIOSH), an
agency created by section 22 of the OSH Act, 29 U.S.C. Sec. 671 (1982),
recommended that the Secretary promulgate a standard requiring employers to
inform employees of potentially hazardous materials in the workplace. 47
Fed.Reg. 12095 (1982). Later that year the Secretary appointed an advisory
committee to develop standards for implementation of the statutory provision
requiring labels or other appropriate forms of warning. That advisory committee
issued its report on June 6, 1975, recommending a classification of hazards, the
use of warning devices such as labels and placards, disclosure of chemical data,
and employee training programs. Id. at 12096.
21
The 1975 Committee report did not result in prompt action by the Secretary. In
1976 a House of Representatives subcommittee held oversight hearings during
which several committee members expressed concern over the Secretary's
failure to promulgate a comprehensive Hazard Communication Standard.
Control of Toxic Substances in the Workplace: Hearings Before the Subcomm.
on Manpower and Housing of the House Comm. on Government Operations,
94th Cong. 2d Sess. 87, 89-90 (1976). Seventeen months later, the full House
Committee on Government Operations issued a Report which criticized the
agency for "miserly use of its delegated powers to deal with disease and deathdealing toxic substances." House Comm. on Government Operations, Failure to
Meet Commitments Made in the Occupational Safety and Health Act, H.R.Rep.
No. 710, 95th Cong., 1st Sess. 13 (1977). The Committee concluded that:
The Department of Labor should exercise its power under the Occupational Safety
22
and Health Act to insure that employers and workers can and will know what kinds
of toxic dangers are present in the Nation's workplaces. OSHA should require
chemical formulators to identify any regulated substance in products they sell.
23
Id. at 15.
24
25
The standard was published in its final form on November 25, 1983. 48
Fed.Reg. 53279. It requires that chemical manufacturers and importers
"evaluate chemicals produced in their workplaces or imported by them to
determine if they are hazardous." 29 C.F.R. Sec. 1910.1200(d)(1) (1984). It
refers to several compilations of toxic materials. These lists establish a floor of
toxic substances which chemical manufacturers or importers must treat as
hazardous. 29 C.F.R. Sec. 1910.1200(d)(3) (1984). Chemicals not included in
the designated compilations must be evaluated for hazardousness by reference
to "available scientific evidence." 29 C.F.R. Sec. 1910.1200(d)(2) (1984). A
manufacturer or importer of chemicals found to be hazardous must "ensure that
each container ... leaving the workplace is labeled" with the chemical identity,
with appropriate hazard warnings, and with the name and address of the source.
29 C.F.R. Sec. 1910.1200(f)(1) (1984). Manufacturers or importers must also
prepare a "material safety data sheet" (MSDS) containing the chemical
The rule allows an exception from the labeling and MSDS ingredient
disclosure requirements when a chemical manufacturer or importer claims that
the chemical identity is a trade secret. 29 C.F.R. Sec. 1910.1200(i) (1984). In
such a case, the manufacturer or importer must provide a MSDS disclosing the
hazardous properties of the chemical and suggesting appropriate precautions. In
the case of a medical emergency, the manufacturer or importer must disclose
the chemical identity to a treating physician or nurse, and may later require
such a health professional to sign a confidentiality agreement. 29 C.F.R. Sec.
1100.1200(i)(2) (1984). Absent a medical emergency, the manufacturer or
importer may be required to disclose the chemical identity to a health
professional who makes a written request detailing the occupational need for
the information, and who is willing to sign a confidentiality agreement
containing a liquidated damages clause. 29 C.F.R. Sec. 1910.1200(i)(3) & (4).
In no case is the manufacturer required to disclose the precise formula, as
opposed to the identity of chemicals in the compound.
The rule provides expressly that:
II.
Jurisdiction under Section 6(f) of the OSH Act
29
30
Congress has in section 6 of the OSH Act authorized the Secretary to issue
health and safety standards. 29 U.S.C. Sec. 655 (1982). In section 8(c)(3) of the
First, Congress has vested in the courts of appeals jurisdiction over challenges
to the validity of section 6 standards. 29 U.S.C. Sec. 655(f) (1982). Congress
has made no such decision with respect to judicial review of section 8
regulations. These are reviewable in the district courts pursuant to the
Administrative Procedure Act. 5 U.S.C. Sec. 703 (1982). Thus if the Hazard
Communication Standard is a section 8 regulation the only course open to us
would be to transfer the petitions for review to an appropriate district court. 28
U.S.C. Sec. 1631 (1982). A court of appeals would reach the merits of a dispute
over a regulation, therefore, only on an appeal from a judgment of the district
court.
32
Second, by whatever route the case arrived in a court of appeals, whether the
challenged rule is a section 6 standard or a section 8 regulation affects its
preemptive effect on state law. Section 18(a) of the OSH Act provides
explicitly:
33
Nothing in this chapter shall prevent any State agency or court from asserting
jurisdiction under State law over any occupational safety or health issue with
respect to which no standard is in effect under section 655 of this title.
34
29 U.S.C. Sec. 667(a) (1982). If, however, a section 6 standard has been
adopted, the role of the states is circumscribed by section 18(b) which
provides:
35
Any State which, at any time, desires to assume responsibility for development
and enforcement therein of occupational safety and health standards relating to
any occupational safety or health issue with respect to which a Federal standard
has been promulgated under section 655 of this title shall submit a State plan
for the development of such standards and their enforcement.
36
29 U.S.C. Sec. 667(b) (1984). The Secretary must accept such a state plan if it
"will be at least as effective in providing safe and healthful employment" as the
OSHA standards. 29 U.S.C. Sec. 667(c)(2) (1984).
37
The intervenor states all have hazard disclosure laws which, if not preempted,
Since the disclosure requirements of laws adopted by the intervening states are
in several respects stricter than those adopted by the Secretary, it is not
surprising that those states would have us classify the challenged rule as a
section 8 regulation rather than a section 6 standard. The preemptive effect of a
section 8 regulation is not dealt with explicitly in the OSH Act, and any implied
preemption would require a finding that it is impossible to comply with both
federal and state law, or that "the state law stands as an obstacle to the
accomplishment of the full purposes and objectives of Congress." Silkwood v.
Kerr-McGee Corporation, 464 U.S. 238, 104 S.Ct. 615, 621, 78 L.Ed.2d 443
(1984). It is not likely that we could make either such finding.
39
The agency decision to include in its rule an express provision preempting state
law would, if the rule is a section 8 regulation rather than a standard, be
reviewable pursuant to the Administrative Procedure Act. Fidelity Federal
Savings and Loan Ass'n v. de la Cuesta, 458 U.S. 141, 102 S.Ct. 3014, 3022,
73 L.Ed.2d 664 (1982). The Secretary's inclusion of an express reference to
preemption in the manufacturing sector appears to have been motivated at least
in part by the desire to reduce the regulatory burden posed by multiple state
laws. 48 Fed.Reg. 53284 (1983). That purpose is arguably at odds with
congressional intention that the OSH Act provide a federal floor for safety in
the workplace. Reduction of burdens posed by multiple state laws does not
appear to have been a significant congressional concern; rather, Congress
favored a uniform federal law so that those states providing vigorous protection
would not be disadvantaged by those that did not. Subcomm. on Labor of the
Sen. Comm. on Labor and Public Welfare, 92d Cong., 1st Sess., Legislative
History of the Occupational Safety and Health Act of 1970, Pub.L. No. 91-596
at 144, 413, 444 (1971). We need not, however, decide whether preemption
would be implied, or whether the preemption provision of the rule itself is valid
as a section 8 regulation, if we conclude that the rule is a section 6 standard,
for, as noted above, such standards are explicitly preemptive under the statute.
40
The Act provides no definition of the term "regulation." The term "occupational
safety and health standard" is defined as
29 U.S.C. Sec. 652(8) (1982). This definition is not helpful in the task of
differentiating between standards and regulations, for it can hardly be said to
exclude the dictionary definition of the term regulation.
43
The states urge that the difference between section 6 standards and section 8
regulations must be determined by looking at the separate purposes behind the
two provisions. Section 6 standards, they urge, serve two purposes: (1) to
improve safety in the workplace by removing specific and already-identified
hazards; and (2) to provide objective criteria capable of immediate application.
Section 8 regulations, they urge, are designed, not for the elimination of
specific and already-identified hazards, but for such purposes as the facilitation
of investigation and enforcement. The states place principal reliance, in this
regard, upon Louisiana Chemical Ass'n v. Bingham, 657 F.2d 777, 782-83 (5th
Cir.1981) in which the court classified the agency's Records Access rule as a
section 8 regulation. The court in Louisiana Chemical Association held that
before proceeding to the merits of a section 6(f) petition for review it must
determine "whether the challenged rule reasonably purports to correct a
particular 'significant risk' or instead is merely an enforcement or detection
procedure designed to further the goals of the Act generally." Id. at 782. It
concluded that the Records Access rule was a section 8 regulation.
44
45
The State of New York urges that a communication rule can never be a
standard, because it does not provide for diminution of risk through improved
protection or reduced exposure. The Secretary found, however, that risk of
harm can be greatly reduced by direct warning to employees, who are in the
best position to assure that dangerous substances are handled in the safest
III.
Preemption of State Hazard Communication Rules in the
47
Manufacturing Sector
48
49
Massachusetts, Illinois, New Mexico and West Virginia raise the question
whether the federal Hazard Communication Standard operates to preclude state
laws outside the manufacturing sector. The Secretary does not contend that the
Standard has such an effect. 48 Fed.Reg. 53284; Respondent's Brief at 84-89.
He urges, as well, that the issue of the standards's operation outside that sector
is not ripe for review. To the extent that the states seek a declaration that their
hazard disclosure laws may operate outside the manufacturing sector, we agree
that it would be premature to make such a declaration in this case. The
Secretary does not urge that they may not so operate, but other parties not
before us might present reasons, such as unseverability as a matter of state law,
which have not been litigated before this court. We hold only that, to the extent
it is valid, the federal Hazard Communication Standard preempts state hazard
disclosure laws with respect to disclosure to employees in the manufacturing
sector.
IV.
Petitioners' challenges to the validity of the standard present three issues: (1) its
limited application to the manufacturing sector; (2) the failure to adopt as a list
of hazardous substances the Registry of Toxic Effects of Chemical Substances
(RTECS) compiled by NIOSH; and (3) the inclusion of the trade secret
exemption. We consider the validity of those aspects of the rule under the
hybrid review scheme of section 6(f), which refers us to substantial evidence in
the rulemaking proceeding. We first interpreted section 6(f) in Synthetic
Organic Chemical Manufacturers Association v. Brennan, 503 F.2d 1155 (3d
Cir.1974), cert. denied, 420 U.S. 973, 95 S.Ct. 1396, 43 L.Ed.2d 653 (1975).
We noted that section 6(e) of the OSH Act requires that whenever the Secretary
promulgates a standard he must publish a statement of the reasons for that
action in the Federal Register. Id. at 1159-60. We held that these published
reasons are subject to judicial review, and that they must be consistent with the
language and purpose of the OSH Act. We held, further, that judicial review of
a standard involves at least five steps:
51
52
53
54
55
56
Id. at 1160. This approach to judicial review under section 6(f) has since been
consistently followed. See, e.g., American Iron and Steel Institute v.
Occupational Safety and Health Administration, 577 F.2d 825, 830-31 (3d
Cir.1978), cert. granted, 448 U.S. 909, 100 S.Ct. 3054, 65 L.Ed.2d 1139
(1980), cert. dismissed, 448 U.S. 917, 101 S.Ct. 38, 65 L.Ed.2d 1180 (1980);
Atlantic & Gulf Stevedores, Inc. v. Occupational Safety and Health Review
Commission, 534 F.2d 541, 551 (3d Cir.1976); AFL-CIO v. Brennan, 530 F.2d
109, 114 (3d Cir.1975). Moreover we have held that "in a Sec. 6(f) proceeding
the Secretary has an affirmative burden to demonstrate the reasonableness of an
adopted standard." Atlantic & Gulf Stevedores, 534 F.2d at 551.
57
None of the petitioners still before us contend that the manufacturing sector
should not be covered by a hazard communication standard. The Secretary's
decision to provide coverage only for employees in the manufacturing sector is
based on a finding that this sector, which includes 32% of total employment,
accounts for more than 50% of the reported cases of illness due to chemical
exposure. 48 Fed.Reg. 53285 (1983). From this datum the Secretary
determined that employees in the manufacturing sector have the greatest risk of
experiencing health effects due to chemical exposure. Id. Agricultural
employees have a higher chemical source incidence rate than manufacturing
employees. The Secretary discounted this datum, however, because 80% of the
reported chemical source cases among agricultural workers involved skin
illnesses from handling plants, which would not be regulated by the proposed
Hazard Communication Standard. Id. Moreover the Secretary concluded that
the Environmental Protection Administration has, under the Federal Insecticide,
Fungicide and Rodenticide Act, exercised jurisdiction over regulation of field
use of pesticides. Excluding agricultural employees, there is substantial
evidence in the record that the manufacturing sector has the highest incidence
rate of chemical exposures which the Agency has authority to regulate.
60
Several petitioners, while conceding that the finding about incidence rate of
illnesses in the manufacturing sector is supported by substantial evidence,
contend that the Secretary's exclusion of other sectors such as service,
construction, and agriculture, is unsupported by reasons that are consistent with
the purposes of the statute. They urge that while the incidence rate for
employees in the manufacturing sector is high overall, some employees in
specific non-manufacturing categories, such as hospital workers, are exposed to
a greater number of toxic substances than are typical workers in the
manufacturing sector. Moreover some workers in specific non-covered
industries have higher reported rates of chemical source illness and injury than
do workers in many covered industries. The Standard Industrial Classification
breakdown, they contend, is not relevant to the statute, since that classification
is made for a myriad of statistical purposes, mainly economic, having little to
do with exposure to hazards. The result of the standard is that spray painters in
the manufacturing sector, for example, must be provided with MSDS's and with
information and training on hazardous chemicals in the products they use,
while spray painters in the construction industry using the same products are
not so protected.
61
62
It should be emphasized that the Agency does not believe that employees in
other industries are not exposed to hazardous chemicals, or that they should not
be informed of those hazards. OSHA has merely exercised its discretion to
establish rulemaking priorities, and chosen to first regulate those industries with
the greatest demonstrated need.
63
64
65
Id. The Secretary's reasoning does not address the petitioners' contention that
reliance on the Standard Industrial Classification is inappropriate because it
ignores the high level of exposure in specific job settings outside the
manufacturing sector.
66
The Secretary maintains that section 6(g) of the Act affords him unreviewable
discretion to determine what industries shall be covered by a standard. That
section provides in relevant part:In determining the priority for establishing
standards under this section, the Secretary shall give due regard to the urgency
of the need for mandatory safety and health standards for particular industries,
trades, crafts, occupations, businesses, workplaces or work environments.
67
29 U.S.C. Sec. 655(g) (1982). We reject the Secretary's contention that his
priority-setting authority under section 6(g) vitiates judicial review of his
determination that only the manufacturing industry need be covered by the
Hazard Communication Standard. Section 6(g) must be read in conjunction
with section 6(f), which provides for judicial review of standards. Indeed the
language "due regard to the urgency of the need for mandatory safety standards
for particular industries" suggests to us a statutory standard by which to
measure the exercise of the Secretary's priority-setting discretion.2 In United
Steelworkers of America v. Marshall, 647 F.2d 1189, 1309-10 (D.C.Cir.1980),
cert. denied, 453 U.S. 913, 101 S.Ct. 3148, 69 L.Ed.2d 997 (1981) the court
reviewed under section 6(f) the Secretary's decision to exempt the construction
industry from a standard limiting exposure to lead. Although the court did not
explicitly address section 6(g), it implicitly rejected the contention that the
Secretary's priority-setting authority is unreviewable. We do so explicitly.
68
Our difficulty with the Secretary's reliance on section 6(g) arises from the
Secretary's failure to explain why coverage of workers outside the
manufacturing sector would have seriously impeded the rulemaking process.
Section 6(g) clearly permits the Secretary to set priorities for the use of the
agency's resources, and to promulgate standards sequentially. Once a standard
has been promulgated, however, the Secretary may exclude a particular
industry only if he informs the reviewing court, not merely that the sector
selected for coverage presents greater hazards, but also why it is not feasible for
the same standard to be applied in other sectors where workers are exposed to
similar hazards. See United Steelworkers, 647 F.2d at 1309-10. The
explanation for the Secretary's action quoted above is deficient in the latter
respect. Thus the Secretary has failed to carry the burden of persuading us that
section 6(g) justifies limitation of coverage to the manufacturing sector.
69
70
72
Any standard ... shall prescribe the use of labels or other appropriate forms of
warning as are necessary to insure that employees are apprised of all hazards to
which they are exposed, relevant symptoms and appropriate emergency
treatment, and proper conditions and precautions of safe use or exposure.
73
29 U.S.C. Sec. 655(c)(7) (1981). The Secretary has given reasons why the
labeling, MSDS, and instruction requirements comply with section 6(c)(7) for
employees in the manufacturing sector, but no explanation why the same
information is not needed for workers in other sectors exposed to industrial
hazards. Such a statement of reasons is required by section 6(f). Snythetic
Organic, 503 F.2d at 1160.
74
We hold, therefore, that the petitions for review of those petitioners who object
to the limitation of the Hazard Communication Standard must be granted. That
standard may continue to operate in the manufacturing sector, but the
Secretary's explanation for excluding other sectors does not withstand the
scrutiny mandated by section 6(f). Thus the Secretary will be directed to
reconsider the application of the standard to employees in other sectors and to
order its application to other sectors unless he can state reasons why such
application would not be feasible. 29 U.S.C. Sec. 655(b)(5).
rejected use of the RTECS list, finding that it was overinclusive because it
encompasses "potential" as well as "identifiable" hazards, id. at 53298, and that
it was underinclusive because no one list can remain suitably up-to-date, id. at
53296. These findings are supported by the Introduction to the RTECS list in
which the editor explains that "[t]he absence of a substance from the Registry
does not imply that the substance is non-toxic, and thus non-hazardous, any
more than the presence of a substance in the Registry indicates that the
substance is hazardous in common use." NIOSH, Registry of Toxic Effects of
Chemical Substances (RTECS) Introduction xi (July 1984). Indeed the editor
notes that the RTECS list includes substances that are common in everyday life
and in nearly every household. Id. at x.
77
The Public Citizen contends that OSHA's determination that the RTECS list is
inappropriate is belied by the Agency's use of that list in its Records Access
rule, see Louisiana Chemical Association v. Bingham, 657 F.2d 777, 783 & n.
10 (5th Cir.1981). The Records Access rule, which merely requires that
employers make available those records which are kept anyway, imposes a
much lighter burden on employers than the Hazard Communication Standard.
Because the purposes and requirements of the two rules are not identical, it was
reasonable for the Secretary to conclude that the hazard determination
procedure for each rule need not be identical. We conclude that the Secretary's
rejection of the RTECS list as overinclusive is supported by substantial
evidence and is consistent with the OSH Act's statutory purposes.
Trade secret protection may arise from two sources: state law or a federal
statute. Ruckelshaus v. Monsanto Co., --- U.S. ----, ----, 104 S.Ct. 2862, 2872,
81 L.Ed.2d 815 (1984); Chevron Chemical Co. v. Costle, 641 F.2d 104, 115
(3d Cir.), cert. denied, 452 U.S. 961, 101 S.Ct. 3110, 69 L.Ed.2d 972 (1981).
The OSH Act does not create substantive trade secret protection. It deals with
that subject in section 15, which provides:
80
29 U.S.C. Sec. 664 (1982). The cross-reference to the Trade Secrets Act, 18
U.S.C. Sec. 1905 (1982) confirms that Congress intended section 15 to protect
against agency disclosure or misuse of data submitted to it under an expectation
that the agency would treat that data as a trade secret to the extent that
applicable state law did so. See Ruckelshaus v. Monsanto, supra, --- U.S. at ----,
104 S.Ct. at 2876. Section 15 cannot be read as authorizing the creation of trade
secret protection going beyond that afforded under state law. Moreover that
section deals only with what the agency and its employees may disclose, not
with what disclosures the agency may compel in the interest of safety in the
workplace.
82
The Secretary contends that while section 15 deals with disclosures by the
agency and its employees, it embodies a recognition by Congress of the
significance in the economy of state law trade secret protection, and that it was
quite appropriate, in drafting the Hazard Communication Standard, to balance
that recognition against the competing congressional concern over safety in the
workplace. See 48 Fed.Reg. 53312 (1983). Aside from section 15, however, the
Secretary points to no provision in the OSH Act authorizing such balancing.
Indeed trade secret protection is not even mentioned in section 6, which directs
that "[t]he Secretary ... shall set the standard which most adequately assures, to
the extent feasible, on the basis of the best available evidence, that no
employee will suffer material impairment of health...." 29 U.S.C. Sec. 655(b)
(5). The quoted provision indicates that Congress struck a balance in favor of
safety in the workplace at the expense of competing interests. In a slightly
different context, the Supreme Court held that in section 6(b)(5), "Congress
itself defined the basic relationship between costs and benefits, by placing the
'benefit' of worker health above all other considerations save those making
attainment of this 'benefit' unachievable." American Textile Manufacturers
Institute v. Donovan, 452 U.S. 490, 509, 101 S.Ct. 2478, 2490, 69 L.Ed.2d 185
(1981).
83
The Secretary originally proposed that while traditional trade secrets such as
chemical formula and process information could be withheld, chemical identity
29 C.F.R. Sec. 1910.1200(c) (1984). The Secretary contends that this definition
was adopted from section 757 of the Restatement of Torts, 48 Fed.Reg. 53314.
In fact, however, inclusion of the parenthetical "(including chemical name or
other unique chemical identifier)" not found in section 757, enlarges
considerably the Restatement definition. The Secretary's comments indicate
that the definition provides trade secret protection for chemical identity which
is determinable by reverse engineering. Id. This type of information has not
traditionally been afforded trade secret protection under state law. See Kewanee
Oil Co. v. Bicron Corp., 416 U.S. 470, 476, 94 S.Ct. 1879, 1883, 40 L.Ed.2d
315 (1974). The Restatement provides that information that may be properly
acquired or duplicated without great difficulty should not be considered a trade
secret. Restatement of Torts, Sec. 757, comment b. The Secretary justified the
enlargement of the Restatement definition, reasoning:
86
Many
products can be reverse engineered if sophisticated analytical techniques are
applied, yet cannot be if less advanced technology is used. The determination of
what is "practical" in terms of reverse engineering capability rests with this degree of
analysis, rather than with a definitive finding of "ability" to be reverse engineered or
not. Furthermore, the definition of a trade secret says that the competitor or potential
competitor does not know or use the information. Thus, even though a competitor
could theoretically "reverse engineer" and discover the components of a product, if
this information is not in fact used, it remains a bona fide trade secret.
87
88
Section 15 deals only with disclosure by the agency or its employees, and
section 6(b)(5) does not permit the Secretary to balance employee safety against
competing economic concerns. No other statutory provision has been called to
our attention which would justify enlarging trade secret protection beyond that
afforded by state law. Indeed it seems plain that state law cannot prevent the
implementation of section 6 safety standards that are otherwise feasible. It
appears that the unarticulated premise of the Secretary's concern about
protecting trade secrets is that they may be constitutionally protected from the
regulatory process. In Westinghouse Electric Corp. v. United States Nuclear
Regulatory Commission, 555 F.2d 82, 95 (3d Cir.1977) we rejected a
constitutional challenge to rules requiring disclosure of proprietary information
as a condition to licensing. The Westinghouse holding is supported by the
Supreme Court's holding in Ruckelshaus v. Monsanto Co., --- U.S. ----, ----, 104
S.Ct. 2862, 2874, 81 L.Ed.2d 815 (June 26, 1984), that a trade secret
voluntarily disclosed to the E.P.A. in exchange for a registration to sell
pesticides is not protected if the owner had notice at the time of disclosure that
the E.P.A. was authorized to use all data submitted. These cases suggest that a
regulation requiring the disclosure even of formula or process information as a
precondition for the sale of hazardous products for use in the workplace would
be valid. See McGarity and Shapiro The Trade Secret Status of Health and
Safety Testing Information: Reforming Agency Disclosure Policies, 93
Harv.L.Rev. 837, 864-67 (1980). None of the petitioners urge that the Secretary
should have required disclosure to that extent. They do contend, however, that
the OSH Act does not authorize the Secretary to promulgate a regulation
granting more protection to information claimed to be confidential than is
afforded by state law.
89
We agree that there is no legal justification for affording broader trade secret
protection in the Hazard Communication Standard than state law affords. No
petitioner urges that the Secretary's original proposal, which would have
protected formula and process information but required disclosure of hazardous
ingredients, is inadequate. That proposal was consistent with "[t]he general
policy of OSHA ... that the interests of employee safety and health are best
served by full disclosure of chemical identity information." 48 Fed.Reg. 53312
(1983). The petition for review will therefore be granted and the proceedings
remanded to the Secretary for reconsideration of the definition of trade secrets,
which definition shall not include chemical identity information that is readily
discoverable through reverse engineering.
The Secretary justifies the requirement that a request for trade secret
information be in writing with supporting documentation as a means of
facilitating dispute resolution:
97
One reason is that "by and large professional training would be required" for
any purpose that would amount to a "need to know" confidential information.
Id. The United Steelworkers of America, AFL-CIO-CLC, a petitioner, points to
a number of instances in the record, however, where non-health-professional
workers used chemical identity information to improve workplace safety. They
urge that employees and local union safety officers, although not health
professionals, have often received training in health and safety, and thus know
how to use the basic literature on chemical hazards, and know how to obtain
technical assistance. Steelworkers' brief at 40.
98
99
A second reason advanced by the Secretary for allowing access only to health
professionals, and not directly to employees, is that "providing access to trade
secret chemical identities only to health professionals on a confidential basis
will protect these employees adequately." 48 Fed.Reg. at 53318. The
Steelworkers point to record evidence, however, that it is quite difficult for
many workers to obtain the services of a health professional, at least prior to the
need for treatment. Steelworkers brief at 41-42. There is no substantial evidence
in the record that significant numbers of unorganized workers will be able to
obtain the services of a health professional prior to the time that treatment
becomes necessary. Even for organized workers, the record evidence suggests
that few local unions retain health professionals.
The Secretary's final justification for limiting access to health professionals
involves the risk of disclosure.
100 is not to say that "downstream" employees are more likely to disclose trade
This
secrets or violate confidentiality agreements than health professionals, but it is an
unmistakable fact that the more people who have access to confidential information,
the more difficult it is to preserve its secrecy or to locate the source of a leak if one
occurs.
101 48 Fed.Reg. at 53318. The Secretary correctly notes that the chance of a leak
increases as the number of people having access to information increases. The
issue posed by the petitioners, however, is not the number of persons obtaining
access, but the type of persons. There is no record evidence supporting the
Secretary's apparent conclusion that employees who are not health professionals
will be more likely to breach a confidentiality agreement than would the same
number of health professionals. We conclude that the restriction in the Hazard
Communication Standard of access to trade secret information to health
professionals is not supported by substantial evidence in the record, and is
inconsistent with the mandate of section 6(b)(5) that OSHA promulgate the
standard that "most adequately assures, to the extent feasible, on the basis of
the best available evidence, that no employee will suffer material impairment of
health...." 29 U.S.C. Sec. 655(b)(5).
c) The Confidentiality Agreement Requirement
102
Hon. Clarkson S. Fisher, Chief Judge, United States District Court for the
District of New Jersey, sitting by designation
**
Hon. James M. Kelly, United States District Court Judge for the Eastern
District of Pennsylvania, sitting by designation
Petitions for judicial review of the standard were filed on November 22, 1983,
in this Court by the United Steelworkers of America, AFL-CIO, and by Public
Citizen, Inc., representing itself and a number of labor groups. Motions to
intervene in these cases were received from the Chemical Manufacturers
Association, the American Petroleum Institute, the National Paint and Coatings
Association, and the States of New York, Connecticut, and New Jersey. In
addition, petitions for review of the standard were filed by the State of
Massachusetts in the First Circuit (No. 84-1063; Jan. 24, 1984); the State of
New York in the Second Circuit (No. 83-4220; Dec. 20, 1983); the State of
Illinois in the Seventh Circuit (No. 84-1111; Jan. 23, 1984); the Flavor and
Extract Manufacturers' Association in the Fourth Circuit (No. 83-2151; Dec. 12,
1983); and the Fragrance Materials Association in the District of Columbia
Circuit (No. 84-1021; Jan. 18, 1984). These cases were subsequently transferred
to this court and consolidated in this proceeding. The cases brought by the
Flavor and Extract Manufacturers' Association and the Fragrance Materials
Association have since been withdrawn
The Secretary urges that Public Citizen Health Research Group v. Marshall,
485 F.Supp. 845 (D.D.C.1980) supports his interpretation of section 6(g). If it
does, we decline to follow it